Med School Loans and Income Based Repayment (IBR)

Qualifying for a Doctor Loan: Medical School Loan Deferment

(Waiving medical school loans from your qualifying debt to income ratio when qualifying for a Doctor Mortgage)

This topic of discussion often comes up because many physician lenders simply advertise “medical school loans not counted in debt ratios”. Once you contact the lender you will realize that this is not by default, all that they require.

Yes, Medical student loans in deferment can often be waived when getting qualified for a doctor loan. The thing to note however, is that you must be able to provide documentation that your medical student loan will remain in deferment for at least a 12 months after your new mortgage loan closes. This isn’t always the case with every lender however this is a common requirement.

Be prepared.

For students graduating medical school and going into residency, many lenders will automatically waive your student loans from your overall debt ratio since residency usually allows for a continuation of your loan deferment.

Qualifying for a Doctor Loan: How some Doctor Lenders view Income Based Repayment (IBR)

Much like a student loan in deferment, lenders will allow you to qualify for a doctor mortgage loan using your lower monthly payment obligation negotiated through Income Based Repayment (IBR). Often a lender will want to know that the current payment you have will continue for at least 12 months after your new mortgage loan closes.

Note: The tricky thing about IBR when trying to use it for qualifying for a mortgage: It is my understanding that IBR can only be negotiated only once a year. Often you have one opportunity per year to renegotiate IBR for another 12 month period. This makes getting the timing just right when trying to get a lender to use this lower monthly payment very difficult. Chances are by the time you close on your new house you might only have 8 or 9 months on your IBR depending on what time of year you apply for your mortgage loan. Consider having the lender calculate your full monthly payment as if it were in regular repayment status. Otherwise find a lender who does not require your current IBR payment to continue for the next 12 mo after loan closes.

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Discussion: Because these rules can vary from bank to bank, does anyone have any experience with qualifying for a doctor loan with deferred medical school loans or IBR?

Did you run into any problems with a specific lender?

Please contribute to the discussion and comment below!

5 thoughts on “Med School Loans and Income Based Repayment (IBR)”

  1. Having trouble getting a mortgage while enrolled in Income Based Repayment program for student loans. I have good credit 725 and have never had any problems paying my rent for the past 16 years.

    Here’s the catch: I’ve got a lot of student loan debt (gov’t and private loans). My loans are currently in repayment and have never been delinquent. I’m enrolled in the “Income Based Repayment” program and consequently my monthly payment is zero dollars a month ($0.00).

    The impasse occurs with the underwriters who insist on calculating the payment that would be required if my loans were not enrolled in this IBR program. In which case I would not qualify for a mortgage.

    I’ve heard that a portfolio loan could be an option. I’m not familiar with this type of loan (advantages vs. drawbacks), so any information, suggestions would be helpful.

    • My suggestion would be go to a local credit union or bank that has people who actually talk to you and make decisions local. They would have a better take on getting the loan through underwriting. Let me know if you want a more specific referral for good loan officers. Good luck!

    • U.S. Bank is an example of a portfolio lender. A portfolio lender is a great resource for people who do not meet traditional underwriting guidelines. They originate loans using their own funds, and then hold the loans they originate in what is called a “portfolio”. To define it loosely, this means they do not necessarily have to underwrite their loans according to Fannie and Freddie’s guidelines. They do follow their own underwriting guidelines, so call a couple of them and explain your situation. You can also contact a mortgage broker, and they should be able to help you find a portfolio lender that can meet your needs.

      Here is the definition of a portfolio lender according to Investopedia:

  2. Yes, it is possible to obtain a mortgage while on an income based repayment. There are lender out there that have had experienced with this situation and have been able to qualify other that are in the same boat as you. Either way, the best thing for you to do is to speak with a knowledgeable lender to see if you can get started on financing a new home. If you need additional assistance, feel free to reach out. Good luck!


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